If you want to know about new digital media, you don’t go to silicon valley, you go to silicon alley. New York City is where all recently major digital media businesses have been born. My home town. Its also the home to BuzzFeed, a well funded, if controversial new media company. Today buzzfeed has a valuation of 200M USD on 20M USD a year in revenue. The company doesn’t want to sell for anything less than 300M USD and investors believe this will soon become a billion dollar media operation.

Buzzfeed.com organizes and creates viral content. When you go to the website you can track popular content trending across the web. Content that is generating “buzz.” The company has a team of 130 employees and recently closed an investment round, raising an additional $20M to fund growth. Total money raised today is 43M but nearly all of the money raised in their previous round is still in the bank, unspent.

While timely, much of the content you find on buzzfeed isn’t by any means traditional news content. For example, one article featured on the website titled “How A Blind Man Takes Beautiful Photos With Instagram” contained one youtube video, two paragraphs and six pictures grabbed from instagram. Despite the fact that its a content company lacking what is considered “traditional content” the company is one of the leading destination sites on the western web.

A recent article titled “21 photos that will restore your faith in humanity” garnered more than 10 million views and 2M likes on facebook. Making it one of the most viewed articles on the site for the month. Given that the site averages 40M unique users a month, the article which only contained photos with descriptions had a significant impact on traffic and raised a lot of questions about this new form of media.

The management of the company comes from a significant pedigree. The founder of the company Jonah Peretti was also the co-founder of huffington post and much of the engineering and analytics team are former Huffington Post engineers. So this is an experienced team of online content creators and promoters and it shows. While behind in revenue, the site already has more traffic than Huffington Post had when it was sold for $315M USD or Bleacher Report, a similar new media site dedicated to sports that was sold for $200M.

The reason that Buzzfeed is behind these other media companies in revenue is because Buzzfeed has a non-traditional business model for online media companies. They don’t sell banner advertisements. Only sponsored content. They specialize in creating paid content that is optimized to go viral. While its not guaranteed that content will always go viral, a hit that reaches 10M unique users is significantly less expensive than paying per impression on a traditional media site.

In addition to the challenges the company will have growing revenue to become that billion dollar company the site isn’t without its controversy. The content and site is optimized to make it easy for content to go viral on the web with a focus on what is likely to do well on facebook and twitter. But much of their content is compiled from what is already trending on other sites like facebook and twitter.

For example, the article that gained 10M UU users and much of the content compiled on the site not only wasn’t created by buzzfeed, but the concept of compiling those images together into a meme wasn’t even originally thought of by buzzfeed.

Two articles previously posted online on NedHardy.com, another popular meme website one titled “7 pictures that will restore your faith in humanity” followed by “13 pictures to help restore your faith in humanity” had already garnered significant traffic. Half the photos used on buzzfeeds “21 pictures” post were taken directly from the NedHardy.com site and the remainder were taken from the popular Reddit community (similar to 2ch). And while the articles links to the original photo source, it doesn’t mention the creators of the meme.

What buzzfeed does well is they track trends generated on other social media websites, then they repackage those memes or trending content under a new title, and publish the content via their website. The content is almost guaranteed to become viral because, it already is viral.

Its the cheapest form of content ever and if they were selling banners, they would be earning a significant amount of money. I think if they do decide to enable banners, revenues are likely to increase. Right now what they are offering more than anything is their talent for identifying viral trends and matching that to a brand looking to piggyback on top of that trend to generate sales or leads.

A recent sponsored post on the website featured animated gifs similar to what you might find on 2ch of actor Jason Statham fighting in different movies. The post is titled “10 Ways Jason Statham Could Kick Your Ass“ and included animated gifs of the actor hitting people with chairs and throwing knives at bad guys. Its actually a promotion for a new action movie starring Jason Statham, called Parker.

More than anything Buzzfeed and many other new media companies focus less on deciding what readers will want to read than aggregating and curating things that have already become popular. Of course, traditional media companies are likely to avoid this, but the problem is that this type of viral, non serious content is what is capturing much of the referral traffic from social media sites like Twitter and Facebook.

Some might argue that its a sign of terrible things to come, old media was about in depth and investigated content, and new media is about…cute kittens. Its a depressing thought, but I think its more than that. Paper is a limiting form, and to capture readers imagination you must be a wordsmith, but with new media the forms of communication are much more diverse. Its now possible to have 21 pictures capture our hope for humanity and the fears of society in much the way Tolstoy captures the essence of his generation with tomes.

Media that becomes popular says something about our society as a whole. Instead of arguing that companies like Buzzfeed are degrading journalism, we need to try to better understand why 2M people felt the need to share with friends the fact that they liked those 21 images of humanity. In the end we are left with more questions than answers. And kittens.